Normal 0 false false false EN-US ZH-CN AR-SA MicrosoftInternetExplorer4

/* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:SimSun; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:Arial; mso-bidi-theme-font:minor-bidi;}

Financial Accounting Standards Board (FASB) 52 is an important aspect for global companies, and both the trades that they perform, as well as currency translation to the home currency.  FASB stands as a body that sets accounting standards for publically-held companies in the form of Generally Accepted Accounting Principles (GAAP).  FASB 52 focuses on the idea that a foreign subsidiaries' accounting and total amount of currency must be measured to the functional currency (as opposed to the reporting currency) before it is translated over to the reporting currency. However, FASB 52 is not the first foray into translation risks.  FASB 52 was created to replace FASB 8, which while much maligned within the business community, and aimed to revise "the existing accounting and reporting requirements for translation of foreign currency transactions and foreign currency financial statements."[1] However, FASB 8, in that state, was not easily implemented or used, and therefore FASB 52 was created in December of 1981. FASB 52 is used via firms implementing the current rate method of translation of currency.  FASB 52 further uses both translation adjustments as well as transaction gains and losses.   Translation adjustments are used to reconcile the differences between the functional (those used in the country of production or sale; not the home currency) and reporting (those used in the home country of the global corporation) currencies.  At the same time, FASB 52 can then be utilized to record transaction gains and losses of the currencies being used between different countries belonging to overall global corporation, which can come from adjusting both liabilities and assets from the functional to reporting currency. Therefore, FASB 52 exists as a way to safely and correctly record changes between currencies for a corporation having many subsidiaries in different countries.

[1] "Going from W2 to 1099 - Your Personal Guide To Starting Your Own Business: FASB 52".  Executive Caliber.  http://www.executivecaliber.ws/sys-tmpl/fasb52/.